JP

Environmental Sector

Situation in Japan

The environmental business market is expanding in Japan. In 2013, it reached a record high of JPY 93.2870 trillion. Growth is especially noted in businesses employing renewable energy in their measures to address global warming and engaging in waste treatment and efficient use of resources. 

The 2011 earthquake and tsunami led to demands in Japan to secure a more flexible and efficient energy supply system utilizing various energy sources to ensure a stable supply of energy, which is the foundation for industrial activities. As such, initiatives to expand the use of renewable energy are urgently needed. In addition, the Paris Agreement adopted at the COP21 UN climate change conference held in December 2015 set forth that all countries, including developing nations, cooperate and engage in new measures to address global warming from 2020. To this end, businesses related to renewable energies, energy-efficient vehicles and other energy-saving products are viewed to be promising.

Sources: Ministry of the Environment "Estimates of Environmental Industry Market Size and Employment Size, etc." (2015) Website of the Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry Ministry of the Environment "FY 2015 June Environment and Economy Monitoring Survey" (2015) 

Energy-saving products*

*Buildings, electric appliances, utility equipment, energy-saving utility services

Market size
  • JPY 12.8506 trillion（2013）
Market growth potential
  • With expansion of renewable energies, the market for energy management such as smart homes and smart meters is expected to grow.
Advantages of setting up business in Tokyo
  • Tokyo has about 30 percent of all the office buildings in Japan, making it a large potential market for energy-efficient systems.
  • The Tokyo Metropolitan Government introduced mandatory targets for reduction in overall greenhouse gas emissions and the cap-and-trade program in FY 2010, and the second compliance period started from FY 2015. Against this backdrop, it is expected that demand for energy-efficient systems in office buildings will continue to increase.
  • In the Tokyo Metropolitan Government's Basic Strategy for Promotion of Industry (2011-2020), environment and energy related industries are positioned as industries that solve social problems. Along with cultivating these industries as key industries, in order to effectively support them, the government actively makes its sites available for implementation of field tests to facilitate commercialization of new products, technologies, and services developed by private businesses. It can be expected that there will be opportunities for foreign affiliates with excellent technologies to participate in such verification projects

Sources:
　Ministry of the Environment "Estimates of Environmental Industry Market Size and Employment Size, etc." (2015)
Japan Building Owners and Managers Association "FY 2014 Building Survey" (2014)
Website of the Bureau of Environment, Tokyo Metropolitan Government
Bureau of Industrial and Labor Affairs, Tokyo Metropolitan
Government "Tokyo Metropolitan Government's Basic Strategy for Promotion of Industry (2011-2020)" (2012)

Storage battery

Market size
  • Energy storage system JPY 34.2 billion（2013）
  • Energy storage device for vehicles JPY 198.2 billion（2013）
Market growth potential
  • Energy storage system JPY 530.0 billion（2020 forecast）
  • Energy storage device for vehicles JPY 575.9 billion（2020 forecast）
  • It is projected that demand for residential use solar power will grow due to an expansion of the output control system and staged reduction of the renewable energy feed-in tariff. It is also forecasted that shifts in peak demand will increase due to ongoing application of night rates for power use at night. This is projected to also increase storage battery demand.
Advantages of setting up business in Tokyo
  • The head offices of many home builders and auto makers that need storage batteries and related devices are located in Tokyo and its surroundings, making Tokyo the perfect location for marketing activities. Including dedicated manufacturers, many foreign affiliates manufacturing storage batteries have set up bases in Tokyo and are conducting business activities here.
  • The Tokyo Metropolitan Government has substantial systems for subsidizing introduction of storage batteries. These include subsidies for residential use storage batteries and subsidies toward small and medium-sized businesses (small and medium-sized health care and welfare facilities and public baths) for energy creation and energy saving equipment. These systems are stimulating demand for storage batteries.

Sources：
Seed Planning "2014 Storage Battery / Energy Storage Systems Market Trends Survey" (2014)
Fuji Keizai "Future Trends for Energy, Large Secondary Batteries and Materials 2014: Next
Generation Vehicle Sector Edition" (2014)
Website of the Bureau of Environment, Tokyo Metropolitan Government
Website of the Tokyo Environmental Public Service Corporation

Cogeneration systems*

* System using a common energy source to produce both electricity and steam for other uses, resulting in increased fuel efficiency.

Market size
  • Cumulative number of systems introduced 15,742（as of end March 2015）
  • Cumulative capacity　10,203MW（as of end March 2015）
Market growth potential
  • As a cogeneration system has high power generation efficiency and makes it possible to use waste heat, its installation as an energy-saving measure is anticipated. Through connection to the power grid, the cogeneration system can also double as a standby power source. With needs for energy security increasing since the 2011 earthquake and tsunami, it is projected that there will be a demand for cogeneration systems for disaster response.
Advantages of setting up business in Tokyo
  • The Japanese government formulated the "Innovative Strategy for Energy and the Environment" in 2012. In it, by 2030 the use of cogeneration systems for industrial and business use is to be expanded to a capacity of 22 million kW (9.4 million kW as of 2010), and the installation of home fuel cells to 5.3 million units (10,000 units as of 2010). Given its concentration of important city functions and the fact that it has over 10 percent of the households in Japan, Tokyo has a large potential market.
  • In order to promote Tokyo's transformation into a smart energy city, the Tokyo Metropolitan Government aims to introduce business use cogeneration systems with a capacity of 600,000 kW by FY 2024, double that of FY 2012. The 5-Year Environment Plan formulated by the Bureau of Waterworks in March 2015, aims to introduce cogeneration systems to all large-scale water purification plants and expand capacity to a total of some 50,000 kW by FY 2019. From this background, demand for cogeneration systems in Tokyo is forecasted to grow even more.
  • In order to promote the spread of cogeneration systems, the Tokyo Metropolitan Government has several subsidy systems such as subsidies for installation of home fuel cells (Ene-Farm) and installation of gas cogeneration systems in office buildings and other facilities, and this is promoting greater demand for related devices in Tokyo.

Sources：
Energy and Environment Council "Innovative Strategy for Energy and the Environment" (2012)
Statistics Bureau, Ministry of Internal Affairs and Communications "Graphic View of Japan's Population and Households" (2010)
Tokyo Metropolitan Government "Report by the Study Group for Expansion of Renewable Energy Use" (2014)
Tokyo Metropolitan Government "Creating the Future: The Long-Term Vision for Tokyo" (2014)
Tokyo Metropolitan Government Bureau of Waterworks 5-Year Environment Plan 2015-2019
(Bureau of Waterworks, Tokyo Metropolitan Government 2015)

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